More Ethanol Plant Bankruptcies Predicted

AgWeb.com
11/18/2008
Charles Johnson, Farm Journal National Editor

Look for more ethanol plant bankruptcies soon. Mark Lakers, president of Ag and Food Associates, an Omaha, Neb., middle market merger and acquisitions investment bank, expects as many as 40 Chapter 11 filings by the end of January.

Those include the 16 VeraSun plants in 8 Midwestern states in bankruptcy proceedings since Oct. 31. The U.S. now has about 150 ethanol plants in operation.

Lakers anticipates rapid consolidation in the ethanol industry, with companies owning plants with less debt buying the mostly newer but more debt-ridden facilities. They will be getting good deals, Lakers says, with 50-million gallon yearly capacity plants selling for as little as $1.50 per gallon.. By comparison, building a new plant would cost $2.20 per gallon.

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